Monday, October 31, 2011

“This facility can’t be efficient!”

The word facility can be substituted with product – or brand, office, subsidiary, company, branch, agency, bureau, department, government, country, economy, etc. – and it will still hold? The writer’s Eastern European friend is proudly talking about the group’s latest venture and how the manufacturing manager reacted to a facility (“This facility can’t be efficient!”) that they considered for acquisition but did not.

But he’s real proud because it is the third new business and is already doing comparatively much better than the previous one, already a success story by itself. There are at least two things the businesses have in common: (a) consumer packaged-goods and (b) efficiency. And efficiency has become instinctive to the people (and the organization) that it is a competitive advantage! Ergo: even a simple business could go beyond local if it is competitive! “We were victims of repressive rule. Free market and globalization opened the door for us but we needed help to understand how to leverage investment. I had to sell my dilapidated car realizing investment was the first step.” Since then they’ve experienced the power of technology, innovation, education and talent development as well as product and market development.

The friend reminds the writer that when the latter first visited, the remark that dropped their jaws was: “We need to mechanize the packing lines as a first step to raise efficiency.” The focus on margins (a clear-cut measure of efficiency) has become an obsession! And they have elevated the game . . . to driving margins via volume, value, and profitability founded on a disciplined and rigorous approach to product development and innovation. But they had to struggle: Europeans (indeed generate more ideas than Americans but the latter are ahead in commercialization) have had the sense that they’re a creative and artistic bunch, and the focus on discipline and rigor would cramp their style if not undermine their creativity. (Everyone would think “I’m a Steve Jobs?”) And so they would lapse into proudly showing off lovely new product ideas. But when tested through the rigor and discipline of product architecture modeling, for instance, it becomes obvious the idea could not travel beyond the home market – i.e., it does not deliver a compelling (human) higher value-added proposition!

Substituting facility with Philippines or Philippine economy, the title of the blog reads: “This economy can’t be efficient!” And why does it matter? Global companies are truly obsessed with efficiency – which is how they are able to raise their competitiveness, and elevate it into a competitive advantage. And nations that are able to attract foreign investments better than others have one thing in common: they are perceived as efficient economies! For example, the US – despite its economic woes – is still the nation that attracts the most in foreign investments. But we could be in better shape if we turn underdevelopment on its head – i.e., we have lots of room for growth unlike the US, which is fully developed! Thus, the US needs ‘stimulus’ money. BUT we need to focus on development, i.e., not piecemeal but building blocks toward, say, our critical basic infrastructure or vital few industries, e.g., ‘Arangkada’.

If the Philippine economy is to be efficient, we have our work cut out for us? We need the Aquino administration’s flagship PPP initiative to take-off? We need to reverse declining exports; prevent insurgents’ attacks on mining installations – i.e., edify Juan de la Cruz about the net positives of the industry; overcome delays and overpayments of major projects; be a preferred nation for major infrastructure projects – e.g., canceling projects like Laguna Lake, Ro-Ro, NAIA 3, rightly or wrongly, undermine our efforts to be perceived as an efficient economy? And we have to be unstuck from an economy driven by oligarchy and monopoly power? Power is closer to man’s animal instinct, not his intellect – as Clinton rued how a supposedly intelligent man could succumb to a Monica? And it applies to corruption too?

Clearly we have ways to go? Those who have elevated efficiency into a competitive advantage have moved the challenge down to their gut – starting in their head, dropping it to their heart and settling in their gut or to the level of their instinct? Simply put, it is above and beyond rhetoric, ideology, debate and ‘kuro-kuro’ and as importantly, way past being frozen to inaction?

Genesis of this Blog

Now a book

Advocacy

About Me

I started writing to columnists and newspaper editors at the end of a trip to the Philippines over Holy Week in 2008 – to echo the frustrations expressed by friends and relations that were much louder and more intense than prior trips. My first thought was: with so much talents and skills how could the country be the basket case of Asia? Are we simply too nice as a people? Since then I have kept abreast with local news and opinions.
I have been a business consultant (since 2003) focused on Eastern Europe. My principal client in Bulgaria, a consumer-products maker, was chosen by the European Business Awards in 2011 as among Europe’s best from the 15,000 companies vetted for the selection. I started my career in 1968 in human resources in the Philippines. I then joined a Fortune 500 company in 1981, working with its Manila subsidiary for seven years and later moved up to its Asian regional headquarters and finally assumed a global responsibility (in global strategy, organization and business competitiveness) until my retirement. I have likewise done consulting work in the Philippines. I live with my family in Stamford, Connecticut, USA.